A former Defense Secretary is trying to warn government and industry leaders that their processes and assumptions must change if America hopes to maintain a military edge on the rest of the world. And he’s also issuing some eye-opening warnings about America’s vulnerability to damaging warfare tactics.

“The good news is we still clearly have the strongest industrial base, the best technology, the best equipped force in the world,” William Lynn III, former Deputy Secretary of Defense from 2009-2011, said during a speech Tuesday at the Atlantic Council. “The bad news is given the external environment, given the budget situation, given the way that technology is developing we won’t be able to retain that edge – retain that lead – unless we take steps … within the industrial base.”

Former Deputy Secretary of Defense William J. Lynn III, shown here with with 172nd Infantry Brigades in Baghdad, Iraq, on Sept. 11, 2009, gave a speech Tuesday saying the U.S. military could lose it’s edge in the world if changes to the technological and budget assumptions aren’t embraced by the military industrial complex (DoD photo by Master Sgt. Jerry Morrison, U.S. Air Force).

Lynn insists that the Pentagon and the massive military industrial complex must adapt to the future and embrace change.

“We’re essentially at the fifth inflection point of defense spending since World War II,” Lynn said. “The first three occurred after conflicts – after World War II, after Korea, after Vietnam, the budget rode up during the conflicts and down afterwards.”

Lynn explained that the fourth inflection happened during the Reagan years, and wasn’t the result of a change in conflict, but rather due to resource changes in the late 1980’s with the fall of the Berlin Wall, the end of the Cold War and Congressional tightening of the Pentagon’s budget.

The fifth inflection point Lynn describes is happening now, in the decline of military spending as the administration executes an Afghanistan exit and upholds sequestration.

But Lynn says this is a different time – politically – than what the military and industry has experienced these budget changes in the past. Now, he says, both the left and the right have changed their positions on defense, and it has drastically changed the landscape. Lynn explained:

In the early 90’s … there was a thinking that you could shift resources … to spend defense resources on other national priorities, that was the motif back then. Now, you don’t see that as much, you don’t see a lot of talk about diverting defense resources … I think there’s less gravitational pull on the defense budget in that sense, particularly from the left side of the political spectrum.

The countering shift though, is on the right on hand side – mostly on the Republican side – support for defense I think is not as strong as it once was. I think in the Tea Party, and in some other newer groups, deficit reduction has started to trump maintaining defense.

Lynn says that creates some tension.

“So there isn’t as much pull down from the left, there isn’t as much support from the right, but right now there is an uneasy stability but we haven’t seen the full impact of the reductions that are already in place because of the instability in the budget,” he said.

The real challenge is, Lynn said, is that the Pentagon’s needs are not declining.

“We don’t face the same kind of challenges we did in the Cold War, but it’s different than what we saw in the early 90’s. The span of challenges that we face right now is much broader, both geographically but also in type.” he said. “We now face challenges across the spectrum of conflict, from the prospect of possible peer challenges over the coming decades in Asia, to the other extreme of terrorists challenging us in Asia and in the Middle East.”

At the same time, Lynn says we’ve seen a change in the trends of warfare.

“It used to be that large nation-states had the most lethal combination of equipment and technology,” he said. Now, even rudimentary devices can cripple an advanced military.

“The most dramatic manifestation was IEDs — you know fertilizer bombs can defeat our most sophisticated armor,” he said frankly.

Lynn explained the same imbalance in counter-strategy, and cyber scenarios as well.

“Anti-access strategies don’t require the same level of technology as we deploy to counter them, so their is an asymmetry growing there,” he said. “And with cyber … the development of weapons in that era doesn’t require the resources in terms of personnel or in terms of dollars to develop very destructive capabilities.”

In this March 8, 2012 photo, a Norwich University ROTC student learns to fight the cyber war. Lynn says recognizing that cyber will move from disruptive to destructive ends is a crucial understanding for the military industrial complex. (Photo: AP/Toby Talbot)

The former Deputy Secretary said military coordination and planning with the national industrial base must change as enemy evolves their aims.

“Five or ten years ago the focus was on exploitation, we called them attacks but it was really theft – theft of information. Now we’re seeing more disruption, where you see denial of service attacks on banks and other entities, but the capability now exists for true destructive attacks,” he explained. “You can destroy equipment, things, and kill people with cyber and I think we should anticipate that is indeed where cyber will go, because the unfortunate history shows we’ve never developed a weapon we haven’t used.”

Lynn left his position as the 30th deputy defense secretary in 2011, and is currently the CEO of Finmeccanica North America and DRS Technologies Inc. He hopes his perspective on how next-generation technologies from the commercial sphere and international markets will drive change in a restructured defense-industrial base and in the Pentagon’s defense-industrial strategies.

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